(1989)I9S!) Uigusi14 [liOYUlHS J] INTH1 \ I \ T I I R O I ARI1CI b I4G0I THE CONSTITUTION THh CYPRUSTELECOMMUNIC VIION \UTHORITY Applicant THI REPUBLIC Ol O P R L S IHROLGII ΠΙΕM1NISTTR 01 IINANU WD/OR WOTHER Respondent* (Ca.se \o 4ySI) Public corpoiations — The C\piih relecommunication \uihoni\ — Whether at not Ηis to be tit ited lor the puiposes ot ta\ and other privileges ol ihc State .is bodies c\crcismg functions on behalf ol the State — Question deteimmcd in the ncgame — Whetherit ma\ be considered in consimih ca.su with sei\anis ol the Stue cirmng out 5 governmental duties inddisclaiming w tieicspomibiluv οι not— Who ma\ be (.amideltd a.s jxisom in ^onsimili casiiwith the Slate — fhc lunctions-poucis andresponsibilities ol the \uthoiit\ in(juesiion undei the Iaw establishing it are ot ι governmental nature and thetelore though the \uihnrn\ is not ,iseivant ol die Republic it is in eonsimili 10 Ciisiito tenants ot the Republic c\eiching functions requned and createdb\ the Oo\unmcm — iilollowt,thatthe \uthoin\ isentitled to immumt\ tram pa\ment ol Income Ta\ Intliiitcj.se theapplicantΜαϊscd inter aha theissuewhether theνate 15 liable to pa\ Ineome Ta\ The applicants aigued that ihc\ aie in consimilica.su iotenants ol theStaleandtheicloic thc\ enjo\ ιhesame immuniu liom lneomcTa\ In ihc couisc ot its judgment the Comι teleiied cstcnsivcK to 2 0 authorities relating to the concept ol persons in eonsimih casii with id\arils ol theState Ha\ing definedthis eoneepi theComt pioecedcd 984 3CL.R. CY.T.V \ Republic &. Another and examined in detail thefunctions and lesponsibilitics ol theapplicant \uthont\ Inthelight otMichfunctions anttresponsibilities as described in thecourse ol thejudgment theComιreached theconclusion thatsuch functions and icsponsibihues arc ol governmental naluic 5 In theliglu ol suchaconclusion ihcCouiιaccepted ihcargumentthat the Authont\ is in consimih ca.su with sen ants ol ihc Slate and iliat therefore it was not bound to pa\ Income Ta\ 10 As a result the sub judiec decision \\hcicb\ ihc respondent Commissionei assessed the Aiiihoiit\ with the pa\ment 01 IncomeTa\ lot the \car ΐ97S was annulled Sub ludiu decision annulled \o aide: ,LS tocosts 15 t.iscs icteircdto Ihc king Cook IT Κ 5/0 20 Coomber {Suiν e\οι ol Ta\cs) ν Justices ol Counts ol Beiks 2 Ta\ Cases I 25 Mciscv Docks A. Haiboiu Board ν Cameion Jones \ \leisev Docks IIS64 651II Η I C Ι4(Π Timlin \ llannatord[ll)49]2 Λ!Ι TR ?27 SO Bntish Broadcasting(oqyoration ν Johns (Inspectoi ot Ta\es) /1964}I Λ! L bR 921 Republic ν TheC\piusFoils \uthotitv (I9S4) ?C/ R 111 3^ Bank \oor Handel Iη Scheepiaaii \ Υ ι \dministiaioi ol Hunganan Propern [I9S4J Ι ΛΙI I R 969 Potts Uiihomv otCvprusv Republic(19S>)> Γ/ R uS'5 tlcctricilv \uthoutv ol Cvpnis \ Petioltna Companv ltd
(1971)1 40 CI R 19 Harrisonltd ν Onllilhs 40 ΤC 2SI 9S5 CY.T.A. v. Republic &Another
(1989)GlasgowCorporation Water Works v. Miller. I T.C.2S. Mersey Docks Harbour Boardv. Lucas. 2 T.C.
- Recourse. 5 Recourse against the income tax assessments raised on applicant. C.Hadjioannou, for theApplicant. 10 A. Evangelou. Senior Counsel of the Republic, for the Respondents. BOYADJIS.J. read the following judgment.This case raises 15 the interesting question of immunity from income tax towhich the CyprusTelecommunications Authority isallegedly entitled. The question has arisen inthe following circumstances: The respondent Commissioner of Income Tax raised for the 20 first timean incometax assessment on theApplicant Authority in respect of the year 1962.i.e.eight years after the latter came into existence. Similar assessments were raised on the Applicant for each ensuing year until I97S. The applicant. hereinafter referred to as "the Authority", objected to each 25 yearly assessment but the respondents omitted to determine these objections and preferred to leavethematter in abeyance. On 10th January,
- however, the respondent Commissioner, communicated to the Authority his decision to 30 dismiss the latters objection to the assessment raised for the year 197Swhereby the chargeable income of the Authority was fixed at £50,000.- and the income tax payable thereon was assessed at £21.250.- By means of the present recourse the Authority is now challenging the aforesaid decision of the 35 Commissioner dated 10th January. 198K on several grounds of law which may conveniently be summarized as follows: (l)The Authority never made a taxable profit within the meaning of the Income Tax Laws and the sub judice 40 assessment is arbitrary and/or in abuse of power and/or excessive. 986 3 C.L.R. CY.T.A. v. Republic &Another Boyacljis, J.
(2)The Authority is a public corporation exercising a function of government and is, therefore, a servant or agent oftheRepublicorinconsimili casu,entitled assuch to immunity from income tax. 5
(3)The Authority is not a "person" within the meaning of sections2and5
(1)oftheIncomeTax Laws 1961to 1979. 10 15
(4)The Authority does not carry on a "trade" within the meaning of section 5
(1)of the Income Tax Laws, especially in view of the fact that section 19of Cap.302 casts on it the obligation to reduce its rates in the following year if during the preceding year it realised a surplus, and also precludes it from making any profit within the meaning of section 5
(1)of the Income Tax Laws. During the hearing of the case learned counsel for the Authority has expressly abandoned the first aforementioned 20 ground of law which included the allegations that the subjudice assessments was factually wrong and arbitrary. Following this development I shall proceed to examine the other aforementioned three grounds of law raised against the sub judice assessment, not in abstractum but on the basis that, 25 examined from the factual aspect, the said assessment was reasonably opened to the Commissioner of Income Tax to make. Gro'.md No.2. Can the Authority rely on the Republic's 30 privilegeandpleadtheGovernment's immunity asan answer to theassessment made on it? Before answeringthisquestion itis useful to examine the nature and origin of the privilege or exception relied upon by the Authority. 35 In England, consistent with the royal prerogative, ageneral principleasto theconstruction ofstatutes imposingchargeshas developed according to which the Crown is not bound bysuch statute unlessthere can begathered from it an intention that the Crown should be bound: See The King Cook, 3 T.R. 519: 40 Coomber (Surveyor of Taxes) v. Justices of County of Berks, 2 Tax Cases I; Mersey Docks & Harbour Board v. Cameron-Jones v. Mersey Docks [1864-65] II H.L.C. 1405; 987 Boyadjis, J. CY.T..A. v. Republic &Another
(1989)and Tamlin v.Hannaford [1949] 2 ALL E.R.
- Referring to this settled rule of construction in British Broadcasting Corporation v.Johns (inspector of Taxes)f1964JIALL E.R.
- Diplock. L.J.said thefollowing at p. 941: 5 ''Since laws are made by rulers for subjects, a general expression in alaw such as 'any person' descriptive of those on whom the law imposes obligations or restraints isnot to be read as including the ruler himself. Under our more sophisticated constitution the concept of sovereignty has in 10 the course of history cometo be treated ascomprising three distinct functions ofaruler:executive,legislativeandjudicial. though thedistinction between thesefunctions inthecase,for instance, of prerogative powers and administrative tribunals is sometimes blurred. The modern rule of construction of 15 statutes is that the Crown, which today personifies the executive government of the country and is also a party to all the legislation, is not bound by a statute which imposes obligationsorrestraintsonpersonsorinrespectof property. unless the statute says so expressly or by necessary 20 implication". It is suggested that the above principle received statutory recognition in Cyprus through the enactment of section 44 of the Interpretation Law.Cap.
- which,under the marginal note 25 "Rights of the Crown", reads as follows: "No Law or public instrument shall in any manner whatsoever affect the rights of the Crown unless it istherein expressly provided or unless it appears by necessary 30 implication that the Crown isbound thereby". Under Article 188.1 of the Constitution, the above statutory provision continues to be in force after the date of the coming into operation of the Constitution and under Article 188.3(a) 35 reference therein to the Crown is to be construed as reference to the Republic. The Republic is not being named in the Income Tax Laws under which the Commissioner of Income Tax has raised the 40 impugned assessment on the Authority and it has not been suggested that they contain words which can be construed as 98S 3 C.L.R. CY.T.A. v. Republic &Another Boyadjis, J. taking away the exemption from taxation enjoyed by the Republic, which wasjudicially recognised for the first timein the judgment of the Full Bench in The Republicof Cyprus, through The Commissioner of Income Tax v.The Cyprus 5 PortsAuthority {1984) 3C.L.R.
- The immunity from taxation enjoyed by the Crown andin our case by the State, may be relied upon by the servants or agents of the State and also bythose who.though not strictly 10 servants of the State, might be considered in consimih casu. See Bank Voor Handel En Scheepraart, IV.Y. v. Administrator of Hungarian Property [1954] 1ALL E.R. 969; and Republic v. Cyprus Ports Authority (supra). Difficulty, however, in the application of the principle of the 15 State's immunity from taxation in the case of a subordinate body often arises in view of the fact that, though the Stateis entitled to operate through servants or agents who are incorporated, in many cases there is no provision in the enactments establishing them (there is none in Cap. 302 20 . establishing the Cyprus Telecommunications Authority) whether or not they are to be treated for the purposes of tax and other privileges of the Stateasbodiesexercising functions on behalf of theState. 25 The applicant Authority in the present case cannot be consideredasservantoftheStateandthequestion whichIhave to determine iswhether it maybeconsidered inconsimilicasu withservantsoftheStatecarryingoutgovernmental dutiesand dischargingState responsibility ornot. 30 The answer to the above question will depend on the consideration of the status, duties and functions of the Authority set out in the statute establishing it. namely, the Telecommunications Service Law, Cap. 302.as subsequently 35 amended, and of the historical background regarding the legislation affecting the functions now performed by the Authority. Before, however, I embark on a consideration of thelast aforementioned enactments, Ipropose toexaminethe caselawdelineatingtheboundaries oftheclassof personswho 40 are"inconsimilicasu withservantsoftheState"towhichclass theAuthority inthepresent caseisallegedtobelong. 989 Boyadjis, J. CY.T.A. v.Republic &Another
(1989)The phrase "in consimili casu" was first coined by Mr. Justice Blackburn in the House of Lords cases of Mersey Docks and Harbour Board v.Cameron -Jones v. Mersey Docks (supra),which hasbeen describedby LordReidin Bank Voor Handel case (supra) as the starting point of these 5 questions.Mr.Justice Blackburn stated thefollowing at p. 1413 of the report: "So far the ground of exemption is perfectly intelligible, but it has been carried a good deal farther, and applied to 10 many cases in which it can scarcely be said that the Sovereign or the servants of the Sovereign are in occupation. Longseries ofcaseshaveestablishedthat where property isoccupied for the purposes of the government of the country, including under that head the police, and the 15 administration of justice, no one is rateable in respect of such occupation. And this applies not only to property occupied for such purposes by the servants of the great departments of State, such as the Post Office, Smith v. Birmingham (7 Ei. and Bl.483). the Horse Guards. Lord 20 Amherst v. Lord Somers (2 T.R. 372), or the Admiralty, The Queen v.Stewart (8El.andBl.360),in allwhichcases the occupiers might strictly be called the servants of the Crown; but also to property occupied by local police. Justices of Lancashire v.Shelford (El. Bl. and Ell.225); 25 to county buildings occupied for the assizes, and for the judges' lodgings. Hodgsen v. Local Board of Carlisle (8 El. and Bl. 116):or occupied as acounty court. The Queen v.Manchester (3 El.and Bl.336);or for ajail. The Queen v. Shepherd (1 Q.B. 170). 30 In these latter cases it is difficult to maintain that the occupants are, strictly speaking, servants of the Sovereign, so as to make the occupation that of Her Majesty; but the purposes are all public purposes, of that kind which, by the 35 constitution of this country, tall within the province of Government, and are committed to the Sovereign, so that the occupiers- though not perhaps strictly servants of the Sovereign, might be considered in consimili casu. And the decisions are uniform, andwerenot disputed at theBar,that 40 the exemption applies so far; but there isa conflict between the decisions as to whether theexemption goes farther". 990 3C.L.R. CY.T.A.v.Republic &Another Boyadjis, J. Readinghisopinion in the above casethe Lord Chancellor (LordWestburv)emphasizedthattheexemptionisnotgivento charity or to public purposes beyond that which is strictly involvedinthepositionthattheCrownisnotboundbytheAct 5 andaddedthefollowing atpp. 1428and 1429ofthereport: 10 15 20 "At last in the case of the Tyne Improvement Commissionersv.Chirton(1Ell.andEll.516),theCourt of Queen's Bench recurred tothat,which isin myopinion the true principle, namely, that the only ground of exemption from the statute of Elizabeth is that which is furnished bytherulethattheSovereign isnotboundbythat statute,andthat consequently whenvaluableproperty (that is, property capable of yielding a net rent above what is required for its maintenance), issought to beexemptedon the ground that it is occupied by bare trustees for public purposes, the publicpurposes must besuch asare required and created by the government of the country, and are therefore to be deemed part of the use and service of the Crown". In Coomber (Surveyor of Taxes) v. Justices of County of Berks (supra), Lord Watson referred to the last quoted extract from the opinion of Lord Westburv, and added the 25 following at p.19: 30 35 40 "Theprecise language of that definition satisfies methat thenoble andlearned Lordmeant to affirm, anddid affirm, that theexemption extendednot onlytotheimmediateand actual servants of the Crown, but to all other persons,not being servants of the Crown, whose occupation was ascribable to abare trust for purposesrequired andcreated bythe Government of thecountry. Andseeingthat,inmy opinion the administration of justice, the maintenance of order, and the repression of crime are among the primary and inalienable functions of aconstitutional Government,I have no hesitation in holding that assize courts and police stationshavebeenerectedforproperGovernment purposes and uses, although the duty of providing and maintaining themhasbeencast upon county orotherlocalauthorities". In Bank Voor Handel v. Hungarian Administrator 991 Boyadjis, J. CY.T.A.\. Republic & Another
(1989)(supra), reading his opinion. Lord Reid drew a distinction between servants of theCrown andthose inconsimih casu with servants of the Crown and stated thefollowing at ρ 981 otthe report5 "Those inconsimili casu aretypically bodies likethe justices. independent ot the Crown, asserting Crown privilege, not tor the benetit ol the re\enues of the Crown, but tor the benefit of their own revenues, in order that the functions which they are carrying out shall not be preiudiced,and it is 10 easy to see why such independent bodies can only be permitted to claim Crown privilege in respect ot a verv limited class ot functions, andonly if theproperty ormoney in respect ot which immunity is claimed is wholly devoted to those functions But thecase ot asubordinate servant ot the 15 Crown is very different Ita Minister receives incometobe used in the service ot the Crown it does not matter whether the purposes for which it is to be used are. or aie not, purposes which, if carried out by independent bodies, would put them in consimih casu with servants otthe Crown in all 20 cases he can claim Crown immunity''. Lord Reid added the following at ρ 983 "While it may be that a Crown servant could not claim 25 Crown immunity in respect of his performance ot statutory duties which served no Crown purpose at all. I can tmd nothing to justify the argument that Crown immunity can only be claimed by the Ciown (or us servants on its behalf) it it is required to protect some direct or financial interest ot 30 the Crown, and still less can I find any support tor the argument that immunity cannot be claimed by the Crown unless the Crown alone is interested in the benetit which it will bring Ihave already said that there is. in mv view,an essential difference between the immunity ot the Crown 35 itselt and immunity which may be claimed by independent bodies on the ground that they are performing tunctionsof a governmental chaiacter There is every reason tor strictly limiting the right otsuch bodies toclaim immunity,but I can see no ground tor applying those limits to the Crown itselt 40 It an Act ot Parliament does not bind the Crown, then the Crown can claim immunity from its provisions whether its 992 3 C.L.R. CY.T.A. v. Republic &Another Boyadjis, J. interest to obtain immunity in a particular case is large or small or direct or indirect". 5 10 15 20 25 30 35 Reading his opinion in the same case, Lord Asquith of Bishopstone stated the following at pp. 990 and 991 of the report: "Persons may enjoy immunity who are not servants of the Crown, but occupy premises, such as assize courts, judges' lodgings, policemen's lodgings, and the like, and do so exclusively for the performance of the functions of the executive government. These persons are in some of the cases described as "in consimili casu" with servants of the Crown. Persons willtend tobeplaced in thiscategory ifthe public functions which they discharge are closely connected with the exercise of the Royal prerogative; e.g., inter alia, the administration of justice, the preservation of public order, the making of war, and theconclusion of peace. And the courts appear, on some of the authorities,to have taken these last factors into account asrelevant in deciding whois a "servant of the Crown" within the second class. These principles seem to be most clearly stated in the opinion of Lord Cranworth in Mersey Docks v. Cameron (38 Digest 466, 286) though they emerge also in Greig v. Edinburgh University (38 Digest 472. 327), Coomber v. Berks JJ. (38 Digest 465, 281), and Metropolitan Meat Industry Board v.Sheedy [1927]A.C.899. Forcompleteness,perhaps,afourth principleor rulemay beadded. Thecourts willlean against including inany ofthe exempted categories an aggregation of commercial undertakings brought under some degree of public statutory control:andthey will(iftheotherrequirements are satisfied) lean in favour of exemption for persons or bodies who are mere Ministerial instruments of the Crown's will,lacking in themselves any discretion or initiative". Reference should finally be made to the decision in British 40 Broadcasting Corporation v.Johns [1964] 1All E.R. 923, C.A. where Diplock, L.J.statedthe following at p.943: 993 Boyadjis, J. CY.T.A. v. Republic &Another
(1989)" I will content myself by saying (i) that "Crown immunity" is restricted to persons who are servants or agents of the executive government andisenjoyed onlyin relation to acts which they door property which theyown oroccupyexclusivelyinthatcapacity; (ii)thatreference in 5 the cases to persons in consimili casu to servants of the Crown -Blackburn.J.incidentally,didnotspeak ofpersons in consimili casu to agents - its today best translated as agentsof theexecutive government;". 10 Dealingwith the question whetherthe B.B.C.carries onall or any of its activities as agent for theexecutive government. hesuggested thefollowing test atp.941: "Are they carried out in the performance of a duty or the 15 exercise of a power which is imposed on or vested in the executivegovernment oftheUnitedKingdombystatute or bythe prerogative?". I conclude the examination of this aspect of the case by 20 stating that the burden is on the person asserting the State's immunity to show that he is entitled to it. See Bank Voor Handelcase(supra). Inowturn toexaminethestatus,functions anddutiesofthe 25 Authority as they emerge from the several provisions of the Telecommunications Service Law, (Law No.67of 1954)now Cap.302,assubsequently amended. TheLawwasfirst enacted on 30th December, 1954, and was cited as the Inland Telecommunications ServiceLawandtheAuthorityestablished 30 thereby was named the Cyprus Inland Telecommunications Authority.The word "Inland"wasdeleted from thetitle ofthe Law andthenameoftheAuthority asaresult oftheamending Law No. 34 of 1962. Regarding the establishment and constitution oftheAuthority,Section 3providesthatitshallbe 35 abodycorporate withperpetual succession andacommonseal andshall have power to acquire,holdand disposeof property, toenter intocontracts,tosueandbeusedinitsnameandtodo allthings necessary for thepurposes of this Law. Section 5,as amended by Law20of 1960,provides that theAuthority shall 40 consist of not more than seven members appointed by the Council of Ministers, one of whom shall be designated as 994 3 C.L.R. CY.T.A. \ . Republic &Another Bojadjis, J. Chairman andanother asViceChairman They holdoffice for a penod of not more than five yearssubject to suchconditions as the Council ot Ministers may determine They are subject to removal at any time by the Council ot Ministers without even 5 assigningany reason therefor Undersection 9A,addedbyLaw No 25 of 1963,the Minister of Communications and Works may issue directions of a general nature concerning the performance of the dutiesbytheAuthority which are necessary for the public benefit and which the Authority is bound to 10 follow. On demand the Authority isunder a duty to provide the said Minister with reports, accounts and other information relatingto the property andtheoperations otthe Authority and to render any assistance to him inchecking such information in themannerthat hemightthink fit Undersection 11 ot theLaw, 15 all members, officers and servants of the Authority shall be deemedtobeemployedinthepublicservicewithin the meaning ot the Criminal Code Genera! provisions regarding the functions ot the Authority 20 are set out inPart III ot the Law. Section 12
(1)casts upon the Authority the duty, inter alia, to operate a good and sufficient telecommunications service in Cvpnis for the Government, public bodies and the public generally, to operate all installations and plant which is. or which may be. acquired by 25 theAuthority undertheprovisionsofthis Law,torthepurposes set out in this section, and to promote the development ot the telecommunications service inaccordance,astaraspracticable. with recognised international standard practice and public demand In ordertoenable theAuthority tocarry out itsduties 30 under section 12
(1), section 12
(2)empowers it subject to the provisions ot this Law to, inter aha, purchase, construct, reconstruct, instal,maintain and operate installations and plant, sell,hire or otherwise supply installation and plant andcarryon ail such other works with a view of providing an efficient 35 telecommunications service. Undersection2"telecommunication"meansanytransmission. emission or reception ofsigns,signals,writingimagesandsounds or intelligence of any nature by wire, radio, visual or other 40 electromagnetic systems The words "telegram", "telegraph" and "telegraph line" have the same meaning as in section 2 of the Telegraph Law.Cap 305 995 Boyadjis. J. CYXA. v.Republic &Another
(1989)Theinstallationsandplantwhichisorwhichmaybeacquired by the Authority under the provisions of this Law is the inland telegraph and telephone undertaking of Cable and Wireless Limited with whom the Authority isempowered under section 24 of the Law to enter into the agreement set out in the First 5 Schedule with a view of acquiring it. The company's inland telegraph undertaking is described in the said agreement as being the telegraph lines andthe installations and plant and the undertaking in connection therewith. It is also stated that "telegram", "telegraph" or "telegraphic" or any cognate 10 expressions includes "telephone". Special financial provisions are to be found insections 14to 22 inclusive. Section 14 provides that for the purpose of enabling the Authority to carry out itsfunctions underthis Law, 15 it may. with the consent of the Council of Ministers, borrow money subject to such conditions as the Council of Minister may deem fit to impose. Under section 15the Authority may, for the purpose of raising money,issue securities which shall be issued, transferred, dealt with and redeemed according to 20 Regulations made by the Council of Ministers. Section 17 requires theAuthority to pay intoafund all sums received byit and pay out of it the remuneration of its members, the salaries of its officers and servants and all expenses incurred by it, including repayment to the Government of the principal and 25 interest on any advances made by the Government to the Authority. Section 18 empowers the Authority to invest all moneys not immediately required to be expended in such securities as may be approved by the Council ot Ministers. Section 19requiresthe Authorityto fix itscharges inrespect of 30 its services at such rates and scales that the revenue derived thereby by it. taking one year with another, will be sufficient and only sufficient as nearly as might be to pay for its running expenses, debts, redemption of securities and a reserve fund. Section 20 requires the Authority to keep proper accounts in 35 respect of its operations which should be audited by an auditor appointed annually with the approval of the Minister of Communications who shall receive copy of the auditor's report. Under section 21,theAuthority isexempted from -(
- a)payment of customs duties on machinery, apparatus, vehicles, 40 etc. imported for usebytheAuthority andnot intended forsale to the general public; (
- b)payment of stamp duty; and (
- c)996 3 C.L.R. CY.T.A. v. Republic &Another Boyadjis, J. paymentofgovernment tax,oranyrateofanylocalauthority, inrespect of anytelegraphline. Reference should lastly be made to section 43 which 5 empowerstheAuthoritytomakeRegulations,notinconsistent withtheprovisionsoftheLawandalwayswiththeapprovalon theCouncil ofMinisters,forthebettercarryingoutoftheLaw intoeffect andinrespect ofmatterswhichincludethefixingof the rate of charges in respect of communications and other 10 services properly renderedbytheAuthorityto itssubscribers. Havingset outthefunctions, powersandresponsibilitiesof the Authority under the Law establishing it, it is of great importance, in the light of the aforementioned authorities, to 15 consider whether they are of governmental nature or not. If the submission of learned counsel for the Authority that the Telegraphs Law, now Cap. 305. created a government monopoly of the use of telegraphy and telephony, theanswer tothequestion shouldbeinthe affirmative. 20 If, on theother hand,thesubmission of learnedcounsel for therespondents that theaforesaid Lawsimplyempoweredthe government tocontrolthenewactivitybyasystemoflicences, the answer to the question should be in the negative and the 25 Authority's claimtothegovernment immunityshouldfail. TheTelegraphs Lawwasnot the first enactment that dealt withtelegraphy.Provision fortheregulation oftheinstallation and working in Cyprus of telegraphic apparatus and for the 30 exerciseofcontrolincenaineventsbytheHighCommissioner over the transmission of messages in Cyprus by telegraphic apparatus wasfirst madein CyprusbytheCyprusTelegraphic Order, 1904,issuedon24th October, 1904,underthe Foreign JurisdictionAct, 1890.Itisnotnecessarytorecitethecontents 35 of this order. It suffices to say that telegraphic apparatus was defined to includeanyapparatus intendedfor thetransmission or receipt of messages with or without the employment of wiresorcablesandthatitwasmadeunlawful foranypersonto instal ormaintain inCyprusanytelegraphicapparatuswithout 40 a licence to be granted in that behalf by the High Commissioner. Therewasalsoprovisionthereinthatincaseof emergency the government would take possession of such 997 Boyadjis, J. CY.T.A. v.Republic & Another
(1989)telegraphic apparatus. The provisions of the Cyprus Telegraphs Order, 1904,in so far as they related to Wireless Telegraphy were revoked on 14th October. 1913, by the Cyprus Telegraphy Amendment 5 Order, 1913,which defined WirelessTelegraphy as any system of transmitting messages without the aidof any wire. The aforesaid two Ordersin Council remained in force until they were repealed by the Telegraphs Law enacted on 15th 10 August,
- Considering its contents, the Order of 1904 cannot be said that it created any Government privilege or monopoly in telegraphy. It simply created a system of government control by means of licences. 15 On 10th June, 1930, the Telephone (Agreement) Law, now Cap. 306, was enacted entitling the Governor to enter into an agreement withthe"company"whichwasdefinedasthe Imperial and International Communications Limited, its successors and assigns,whereby thecompany wouldtake overthe Government 20 telephonesandestablishandmaintainthetelephoneserviceinthe then colony of Cyprus under terms which, inter alia, were exempting the company from payment of special and exclusive taxation in respect of its property and revenues in Cyprus and from import duties. In 1934Cable and Wireless Ltd.succeeded 25 Imperial and International Communications Ltd Until the establishment of the Authority, Cable and Wireless Ltd. were providing telecommunications in Cyprus on an exclusive basis pursuant to an agreement with the Government entered into undertheTelephone (Agreement) Law,now Cap.
- 30 The allegation of the Authority that its functions are of a governmental nature isbased on section 3
(1)of the Telegraphs Law,now Cap. 305,whichreadsas follows: 35 "3
(1)The Governor (now the Council of Ministers) shall have the exclusive privilege of establishing, constructing, maintaining and working telegraphs and telegraph lines within the Colony (now theRepublic)". 40 Sub-section
(1)of section 3 is followed by four other subsections which read asfollows:- 998 3C.L.R. 5 CY.T.A.v.Republic &Another Boyadjis, J. "3
(2)The Governor may grant a licence, on such terms and conditions and in consideration of such payments as he thinks fit, to any person or telegraph company to establish, construct, maintain or work a telegraph or telegraph linewithin any part of the Colony andto place, lay,carry and maintain any poles or wirefor the purpose of such telegraph or telegraph line in, along, through, across or under anystreet or immovable property. 10
(3)The Governor may, at any time, revoke any licence granted under this section on the breach of any of the terms or conditions therein contained or in default of payment of any consideration payable thereunder. 15
(4)Every licence to establish,construct, maintain or work a telegraph granted under the provisions of any of the enactments hereby repealed and subsisting at the timeof thecominginto operation ofthis Law,shallbedeemed to have been granted under this Law, and every telegraph line or pole placed under, in,upon, over, along or across any street or immovable property for the purposes of such telegraph shall be deemed to have been placed in exercise of the powers conferred by, and after the due observance of allthe requirements of, this Law. 20 25 30 35 40
(5)If any person or telegraph company to whom a licence has been granted under this section breaks any term or condition contained in such licence, such person or telegraph company shall beguilty of an offence andshall be liable on conviction to a fine not exceeding one hundred pounds and to a further fine not exceeding fifty pounds for every week during which the breach of the term or condition continues". Section 2 of the Law provides that: (i) "telegram" or "message" means any communication transmitted orintendedto betransmitted bytelegraph or to be delivered or intended to be delivered as a communication transmitted either wholly or partly by telegraph. 999 Boyadjis, J. CY.T.A. v.Republic &Another
(1989)(ii) "telegraph" includes "telephone" and means an electric or magnetic telegraph, and includes appliances and apparatus for making, transmitting or receiving telegraphic, telephonic or other communications by means of electricity ormagnetism, orby anyagency of a 5 like nature, with the aid of wires". I should add at this juncture that according to the uncontradicted affidavit evidence by Philippos Vatyliotis, the Chief Engineer of the Authority, the telex service provided by 10 the Authority comprises the transmission of messages through telephone linesandisidentical tothetelegraph service,theonly difference beingthat themessagesaretransmitted automatically on a subscriber to subscriber basis instead of from telegraph office to telegraph office. Ishould alsoaddthat under section 6 15 of the Law, Cap.305,on anypublicemergency or inthe public interest the Council of Ministersmay.interalia,take temporary possession of any telegraph or telegraph line established. maintained or worked by a person or telegraph company licensed under this Law, and also that the Authority does not 20 operate pursuant to any licencegranted under this or any other law. In England telegraphy was treated in a similar manner. Section 4 of theTelegraph Act, 1869,reads as follows: 25 "4.The Postmaster General to have exclusive privilege of ' sending messages with certain exceptions. -The Postmaster General, by himself or by his deputies, and his and their respective servants and agents, shall have the exclusive 30 privilege of transmitting telegrams within the United Kingdom of Great Britain andIreland,except as hereinafter provided; and shall also within that Kingdom have the exclusive privilege of performing all the incidental services of receiving, collecting, or delivering telegrams, except as 35 hereinafter provided". The above English corresponding provision which isclosely similar to our provision in section 3
(1)of theTelegraphs Law, Cap. 305, was considered and compared with the Wireless 40 Telegraphy Acts of 1904 and 1949,by the Court of Appeal in Englandinthecaseof B.B.C. v.Johns (supra). Itwasdescribed 1000 3 C.L.R. CY.T.A. v. Republic &Another Boyadjis, J. as a statutory method of creating amonopoly in the executive government. I have found extremely helpful the following passage from the judgment of Diplock, L.J., at p.942 of the report: 5 10 15 20 25 30 "In the case of telegraphy, which was invented in 1837, Parliament,bytheTelegraphAct, 1869,s.4,didconfer onthe Postmaster-General the exclusive privilege, with certain exceptions, of transmitting inland telegrams, a privilege which was held to extend to telephonic communications when telephony was invented (see A.-G. v. Edision Telephone Co. of London [1880] 6, Q.B.D. 244); but this statutory method of dealingwith anew activity bycreating a monopoly in the executive government with exceptions which included, inter alia, other persons license by the Postmaster-General, is in marked contrast to the way in which Parliament dealt with the new activity of wireless telecommunication in the Wireless Telegraphy Act. 1904. By that Act. which in the income tax year with which this appeal is concerned had been replaced by the Wireless Telegraphy Act, 1949, Parliament contended itself with empowering the executive government, acting through the agency ot the Postmaster-General, to control wireless transmission and reception by asystem of licensing. It was unders.1 of theActof 1949that alicencewasgrantedbythe Postmaster-General to the B.B.C to use wireless telegraph stations for broadcasting. If the B.B.C.had been entitled to Crown immunity, it would have required no licence, any more than the Admiralty, the War Office or the Royal Air Force". The B.B.C. was held not entitled to the Crown immunity from taxation on theground that broadcasting wasnever made a function of government and the Wireless Telegraphy Acts 35 1904and 1949,upon which the B.B.C.relied insupport of their argument that they had created a Crown monopoly in wireless telegraphy, all that they purported to dowasto provide for the regulation of wirelesstelegraphybyasystem oflicences. There was no provision in the Wireless Telegraphy Acts similar to 40 section 4 of the Telegraph Act, 1869,or to section 3
(1)of our Telegraphs Law,Cap.305(supra).Thatthisistheratio decidenti in the B.B.C.case (supra) becomes evident from the following 1001 Boyadjis, J. CY.T.A. v.Republic &Another
(1989)statement of LordDiplock atp.942: "The charter thus empowers the B.B.C. to provide broadcasting services either under contract with the Postmaster-General andpursuanttoalicencegrantedunder 5 s.l oftheWirelessTelegraphyAct, 1949,or,withoutlicence, as agent for the executive government. The serviceswith whichthisappealisconcernedareprovidedbytheB.B.C. in theexerciseoftheformer power,pursuanttothelicenceand agreement ofJune 12,1952". 10 Very relevant is also the following passage from the judgment of Wilmer,L.J.atp. 930: "It was,however,contendedby counsel for theB.B.C,and 15 the contention appears to have been accepted by Wilberforce, J., that from the early days of wireless telegraphy the Crown asserted a monopoly in respect thereof. Idonot think thatthis isso. What happenedwas that Parliament passed the Wireless Telegraphy Act, 1904, 20 since replaced by the WirelessTelegraphy Act, 1949, which innosensecreatedaCrownmonopolyinrespectofwireless telegraphy. AllthattheActpurported todowastoprovide for the regulation of wireless telegraphy by a system of licences. In other words,wirelesstelegraphy wastreated in 25 muchthesame wayinwhichroadtraffic wastreated onthe invention of the internal combustion engine, and in which more recently aviation hasbeen treated. It may bethat at some date in the future it will similarly be necessary to legislate for the regulation of spacetravel. It seemsto me 30 that,whenbroadcastingbecameapracticalpossibility,itwas forParliamenttodecidehowitshouldbedealtwith. Itmight havebeenlefttobedevelopedentirelybyprivateenterprise, as I understand is the position in the United States of America Itmight,ontheotherhand,havebeenspecifically 35 madeafunction ofgovernment,aswasnodoubtthecasein NaziGermany;forinstance,byimposingastatutorydutyon thePostmaster-General,orsomeotherMinister,toorganise agovernmentbroadcastingservice. Thiswaswhatwasdone in relation tocertain aspectsof theNational Health Service, 40 as washeldby this court inPfizer Corpn.v.Ministryof Health[1963]3ALL E.R.779. HadParliament seenfit to 1002 3 C.L.R. CY.T.A. v. Republic &Another Boyadjis, J. deal withbroadcastinginthesamesort of way,itwouldno doubt have been correct to say that broadcasting hadbeen madeafunction ofgovernment". 5 Guided by the caselaw referred to hereinabove,taking into consideration thetotalityofthecircumstancesandinparticular thestatus,functions and duties of theAuthority, the degreeof governmental control exercised over it, the fact that its functions and powers fall within the province of government, 10 andrecallingthat,unliketheB.B.C,itdoesnotoperateundera licencefrom theexecutivegovernment noristheGovernment entitledincaseofemergencytotakeoveritsoperationsunder section 6 of theTelegraphs Law, Cap. 305,a power which is limited only to licencees, I have come to the conclusion that, 15 though the Authority is not a servant of the Republic, it isin consimili casu to servants of theRepublic exercising functions required andcreated bytheGovernment andisentitled tothe latter's immunity from payment of income tax. This case is indistinguishable from thecaseof TheRepublic v.ThePorts 20 Authority of Cyprus(supra). Havingsustainedground2aboveandhavingfound that the Authority isentitledtotheRepublic'simmunityfrom taxation, itbecomesunnecessarytoexaminetheremainingtwogrounds 25 of lawput forward bythe Authorityagainstthevalidity ofthe subjudiceassessment. Thesesamegroundswereputforwardby theCyprusPortsAuthorityinThePortsAuthorityofCyprus v.TheRepublic, through theCommissionerofIncomeTax
(1983)3 C.L.R. 385, where, though Pikis, J. thought it 30 unnecessarytopronounceupontheirvalidity,heexpressedthe viewthatsuccessinthatareawashardtovisualize. IwouldliketoaddtotheremarksofPikis,J.,that,atleastas regards thequestion whethertheAuthority is"trading"ornot, 35 success is not only hard but almost impossible to visualize in view of the decisions in ElectricityAuthority of Cyprus v. PetrolinaCompanyLtd.
(1971)1 C.L.R.19,HarrisonLtd.v. Griffiths40T.C.281, Glasgow CorporationWater Works v.Miller 1 T.C 28 and Mersey Docks HarbourBoard v. 40 Lucas2T.C25. In the result, the recourse succeeds. The sub judice 1003